MOLINE, Ill., Aug. 19, 2016 /CNW/ -- Net income
attributable to Deere & Company (NYSE: DE) was $488.8 million, or $1.55 per share, for the third quarter ended
July 31, compared with $511.6 million, or $1.53 per share, for the same period last
year.
For the first nine months of the year, net income attributable
to Deere & Company was $1.239
billion, or $3.91 per share,
compared with $1.589 billion, or
$4.67 per share, last year.
Worldwide net sales and revenues decreased 11 percent, to
$6.724 billion, for the third quarter
and declined 9 percent, to $20.124
billion, for nine months. Net sales of the equipment
operations were $5.861 billion for
the quarter and $17.737 billion for
the first nine months, compared with $6.840
billion and $19.843 billion
for the periods last year.
"John Deere's performance in the third quarter reflected the
continuing impact of the global farm recession as well as difficult
conditions in construction equipment markets," said Samuel R. Allen, chairman and chief executive
officer. "All of Deere's businesses remained profitable with the
Agriculture & Turf division reporting higher operating profit
than last year. As in past quarters, our results benefited from the
sound execution of our operating plans, the impact of a broad
product portfolio, and our success keeping a tight rein on costs
and assets."
Summary of Operations
Net sales of the worldwide equipment operations declined 14
percent for the quarter and 11 percent for the first nine months
compared with the same periods a year ago. Sales included price
realization of 2 percent for the quarter and year to date.
Additionally, sales included an unfavorable currency-translation
effect of 2 percent for both the quarter and nine months. Equipment
net sales in the United States and
Canada decreased 16 percent for
the quarter and 13 percent year to date. Outside the U.S. and
Canada, net sales decreased 12
percent for the quarter and 7 percent for the first nine months,
with unfavorable currency-translation effects of 4 percent and 6
percent for the respective periods.
Deere's equipment operations reported operating profit of
$625 million for the quarter and
$1.526 billion for nine months,
compared with $601 million and
$1.842 billion last year. The
improvement for the quarter was primarily driven by price
realization, lower production costs and a decrease in selling,
administrative and general expenses, partially offset by reduced
shipment volumes and the unfavorable effects of foreign-currency
exchange. The year-to-date decline was mostly due to lower shipment
volumes, unfavorable effects of foreign-currency exchange and a
less favorable product mix. Partially offsetting these factors for
the year-to-date period were price realization, lower production
costs and decreased selling, administrative and general expenses.
Both periods benefited from a gain on the sale of a partial
interest in the unconsolidated affiliate SiteOne Landscape Supply,
LLC.
Net income of the company's equipment operations was
$353 million for the third quarter
and $873 million for the first nine
months, compared with $344 million
and $1.109 billion for the
corresponding periods of 2015.
Financial services reported net income attributable to Deere
& Company of $125.9 million for
the quarter and $357.9 million for
nine months compared with $153.4
million and $480.0 million
last year. Lower results for the quarter were primarily due to
less-favorable financing spreads, a higher provision for credit
losses and higher losses on lease residual values. The year-to-date
decline was largely a result of higher losses on lease residual
values, less-favorable financing spreads and a higher provision for
credit losses. Additionally, prior year-to-date results benefited
from a gain on the sale of the crop insurance business.
Company Outlook & Summary
Company equipment sales are projected to decrease about 10
percent for fiscal 2016 and be down about 8 percent for the fourth
quarter compared with year-ago periods. Included in the forecast is
a negative foreign-currency translation effect of about 2 percent
for the full year and a positive translation effect of about 1
percent in the fourth quarter. For fiscal 2016, net income
attributable to Deere & Company is anticipated to be about
$1.350 billion.
"Deere continues to perform well in the face of challenging
market conditions, particularly in relation to agricultural
downturns of the past," Allen said. "This underscores the success
of our efforts to develop a more durable business model and a wider
range of revenue sources. At the same time, we are continuing to
focus on ways to make our operations more efficient and achieve
further structural cost reductions. We remain confident in the
company's present direction and firmly believe Deere is on the
right track to deliver significant value to its customers and
investors in the years ahead."
Equipment Division Performance
Agriculture & Turf. Sales fell 11 percent for the
quarter and 7 percent for nine months due largely to lower shipment
volumes and the unfavorable effects of currency translation. These
factors were partially offset by price realization.
Operating profit was $571 million
for the quarter and $1.329 billion
year to date, compared with $472
million and $1.378 billion,
respectively, last year. The improvement for the quarter was
primarily driven by price realization, lower production costs and
lower selling, administrative and general expenses, partially
offset by lower shipment volumes and unfavorable effects of
foreign-currency exchange. Year-to-date results were down primarily
because of reduced shipment volumes, unfavorable effects of
foreign-currency exchange and a less favorable product mix,
partially offset by price realization and lower production costs
and selling, administrative and general expenses. Both periods
benefited from a gain on the sale of a partial interest in SiteOne
Landscape Supply, LLC.
Construction & Forestry. Construction and forestry
sales decreased 24 percent for the quarter and 21 percent for nine
months mainly as a result of lower shipment volumes.
Operating profit was $54 million
for the quarter and $197 million for
nine months, compared with $129
million and $464 million for
the corresponding periods last year. Operating profit fell for the
quarter mainly due to reduced shipment volumes and a less favorable
product mix, partially offset by lower production costs, a decrease
in selling, administrative and general expenses and price
realization. Year-to-date results declined primarily due to lower
shipment volumes, partially offset by lower production costs and
selling, administrative and general expenses.
Market Conditions & Outlook
Agriculture & Turf. Deere's worldwide sales of
agriculture and turf equipment are forecast to decrease by about 8
percent for fiscal-year 2016, including a negative
currency-translation effect of about 2 percent.
Industry sales for agricultural equipment in the U.S. and
Canada are forecast to be down 15
to 20 percent for 2016. The decline, reflecting the impact of low
commodity prices and weak farm incomes, has been most pronounced in
the sale of higher-horsepower models.
Full-year 2016 industry sales in the EU28 are forecast to be
flat to down 5 percent, with the decline attributable to low
commodity prices and farm incomes, including continued pressure on
the dairy sector. In South
America, industry sales of tractors and combines are
projected to be down 15 to 20 percent largely as a result of
economic and political concerns in Brazil. Asian sales are projected to be flat
to down slightly, due in part to weakness in China.
Industry sales of turf and utility equipment in the U.S. and
Canada are expected to be flat to
up 5 percent for 2016. Deere sales are benefiting from new products
and general economic growth.
Construction & Forestry. Deere's worldwide sales of
construction and forestry equipment are forecast to be down about
18 percent for 2016, including a negative currency-translation
effect of about 1 percent. The forecast decline in sales largely
reflects the impact of weak conditions in North America. In forestry, global industry
sales are expected to be down 5 to 10 percent from last year's
strong levels.
Financial Services. Fiscal-year 2016 net income
attributable to Deere & Company for the financial services
operations is expected to be approximately $480 million. The outlook reflects less-favorable
financing spreads, higher losses on lease residual values and an
increased provision for credit losses. Additionally, 2015 results
benefited from a gain on the sale of the crop insurance
business.
John Deere Capital Corporation
The following is disclosed on behalf of the company's financial
services subsidiary, John Deere Capital Corporation (JDCC), in
connection with the disclosure requirements applicable to its
periodic issuance of debt securities in the public market.
Net income attributable to John Deere Capital Corporation was
$90.4 million for the third quarter
and $259.9 million year to date,
compared with $126.9 million and
$376.4 million for the respective
periods last year. The decline for the quarter was primarily due to
a less favorable financing spread, higher losses on lease residual
values and a higher provision for credit losses. Year-to-date
results decreased mainly due to higher losses on lease residual
values, less-favorable financing spreads and a higher provision for
credit losses.
Net receivables and leases financed by JDCC were $32.928 billion at July
31, 2016, compared with $33.400
billion last year.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Statements under "Company Outlook &
Summary," "Market Conditions & Outlook," and other
forward-looking statements herein that relate to future events,
expectations, trends and operating periods involve certain factors
that are subject to change, and important risks and uncertainties
that could cause actual results to differ materially. Some of
these risks and uncertainties could affect particular lines of
business, while others could affect all of the company's
businesses.
The company's agricultural equipment business is subject to a
number of uncertainties including the many interrelated factors
that affect farmers' confidence and financial condition.
These factors include demand for agricultural products, world grain
stocks, weather conditions (including its effects on timely
planting and harvesting), soil conditions (including low subsoil
moisture), harvest yields, prices for commodities and livestock,
crop and livestock production expenses, availability of transport
for crops, the growth and sustainability of non-food uses for some
crops (including ethanol and biodiesel production), real estate
values, available acreage for farming, the land ownership policies
of various governments, changes in government farm programs and
policies (including those in Argentina, Brazil, China, the European Union, India, Russia
and the U.S.), international reaction to such programs, changes in
environmental regulations and their impact on farming practices;
changes in and effects of crop insurance programs, global trade
agreements, animal diseases and their effects on poultry, beef and
pork consumption and prices, crop pests and diseases, and the level
of farm product exports (including concerns about genetically
modified organisms).
Factors affecting the outlook for the company's turf and utility
equipment include consumer confidence, weather conditions, customer
profitability, consumer borrowing patterns, consumer purchasing
preferences, housing starts, infrastructure investment, spending by
municipalities and golf courses, and consumable input costs.
Consumer spending patterns, real estate and housing prices, the
number of housing starts and interest rates are especially
important to sales of the company's construction and forestry
equipment. The levels of public and non-residential
construction also impact the results of the company's construction
and forestry segment. Prices for pulp, paper, lumber and
structural panels are important to sales of forestry equipment.
All of the company's businesses and its reported results are
affected by general economic conditions in the global markets and
industries in which the company operates, especially material
changes in economic activity in these markets and industries;
customer confidence in general economic conditions; foreign
currency exchange rates and their volatility, especially
fluctuations in the value of the U.S. dollar; interest rates; and
inflation and deflation rates. Government spending and taxing
could adversely affect the economy, employment, consumer and
corporate spending, and company results.
Customer and company operations and results could be affected by
changes in weather patterns; the political and social stability of
the global markets in which the company operates; the effects of,
or response to, terrorism and security threats; wars and other
conflicts and the threat thereof and the response thereto; natural
disasters; and the spread of major epidemics.
Significant changes in market liquidity conditions and any
failure to comply with financial covenants in credit agreements
could impact access to funding and funding costs, which could
reduce the company's earnings and cash flows. Financial
market conditions could also negatively impact customer access to
capital for purchases of the company's products and customer
confidence and purchase decisions, borrowing and repayment
practices, and the number and size of customer loan delinquencies
and defaults. A debt crisis, in Europe or elsewhere, could negatively impact
currencies, global financial markets, social and political
stability, funding sources and costs, asset and obligation values,
customers, suppliers, demand for equipment, and company operations
and results. The company's investment management activities
could be impaired by changes in the equity, bond and other
financial markets, which would negatively affect earnings.
The potential withdrawal of the United
Kingdom from the European Union and the perceptions as to
the impact of the withdrawal may adversely affect business
activity, political stability and economic conditions in the
United Kingdom, the European Union
and elsewhere. The economic conditions and outlook could be further
adversely affected by (i) the uncertainty concerning the timing and
terms of the exit, (ii) new or modified trading arrangements
between the United Kingdom and
other countries, (iii) the risk that one or more other European
Union countries could come under increasing pressure to leave the
European Union, or (iv) the risk that the euro as the single
currency of the Eurozone could cease to exist. Any of these
developments, or the perception that any of these developments are
likely to occur, could affect economic growth or business activity
in the United Kingdom or the
European Union, and could result in the relocation of businesses,
cause business interruptions, lead to economic recession or
depression, and impact the stability of the financial markets,
availability of credit, currency exchange rates, interest rates,
financial institutions, and political, financial and monetary
systems. Any of these developments could affect our businesses,
liquidity, results of operations and financial position.
Additional factors that could materially affect the company's
operations, access to capital, expenses and results include changes
in and the impact of governmental trade, banking, monetary and
fiscal policies, including financial regulatory reform and its
effects on the consumer finance industry, derivatives, funding
costs and other areas, and governmental programs, policies, tariffs
and sanctions in particular jurisdictions or for the benefit of
certain industries or sectors (including protectionist, economic,
punitive and expropriation policies and trade and licensing
restrictions that could disrupt international commerce); actions by
the U.S. Federal Reserve Board and other central banks; actions by
the U.S. Securities and Exchange Commission (SEC), the U.S.
Commodity Futures Trading Commission and other financial
regulators; actions by environmental, health and safety regulatory
agencies, including those related to engine emissions, carbon and
other greenhouse gas emissions, noise and the effects of climate
change; changes in labor regulations; changes to accounting
standards; changes in tax rates, estimates, and regulations and
company actions related thereto; compliance with U.S. and foreign
laws when expanding to new markets and otherwise; and actions by
other regulatory bodies including changes in laws and regulations
affecting the sectors in which the company operates. Trade,
financial and other sanctions imposed by the U.S., the European
Union, Russia and other countries
could negatively impact company assets, operations, sales,
forecasts and results. Customer and company operations and
results also could be affected by changes to GPS radio frequency
bands or their permitted uses.
Other factors that could materially affect results include
production, design and technological innovations and difficulties,
including capacity and supply constraints and prices; the
availability and prices of strategically sourced materials,
components and whole goods; delays or disruptions in the company's
supply chain or the loss of liquidity by suppliers; disruptions of
infrastructures that support communications, operations or
distribution; the failure of suppliers to comply with laws,
regulations and company policy pertaining to employment, human
rights, health, safety, the environment and other ethical business
practices; events that damage the company's reputation or brand;
significant investigations, claims, lawsuits or other legal
proceedings; start-up of new plants and new products; the success
of new product initiatives and customer acceptance of new products;
changes in customer product preferences and sales mix whether as a
result of changes in equipment design to meet government
regulations or for other reasons; gaps or limitations in rural
broadband coverage, capacity and speed needed to support technology
solutions; oil and energy prices, supplies and volatility; the
availability and cost of freight; actions of competitors in the
various industries in which the company competes, particularly
price discounting; dealer practices especially as to levels of new
and used field inventories; changes in demand and pricing for used
equipment; labor relations and contracts; acquisitions and
divestitures of businesses; the integration of new businesses; the
implementation of organizational changes; difficulties related to
the conversion and implementation of enterprise resource planning
systems that disrupt business, negatively impact supply or
distribution relationships or create higher than expected costs;
security breaches and other disruptions to the company's and
suppliers' information technology infrastructure; and changes in
company declared dividends and common stock issuances and
repurchases.
Company results are also affected by changes in the level and
funding of employee retirement benefits, changes in market values
of investment assets, the level of interest and discount rates, and
compensation, retirement and mortality rates which impact
retirement benefit costs, and significant changes in health care
costs including those which may result from governmental
action.
The liquidity and ongoing profitability of John Deere Capital
Corporation and other credit subsidiaries depend largely on timely
access to capital in order to meet future cash flow requirements,
to fund operations and costs associated with engaging in
diversified funding activities, and to fund purchases of the
company's products. If general economic conditions
deteriorate or capital markets become more volatile, funding could
be unavailable or insufficient. Additionally, customer
confidence levels may result in declines in credit applications and
increases in delinquencies and default rates, which could
materially impact write-offs and provisions for credit losses.
The company's outlook is based upon assumptions relating to the
factors described above, which are sometimes based upon estimates
and data prepared by government agencies. Such estimates and
data are often revised. The company, except as required by
law, undertakes no obligation to update or revise its outlook,
whether as a result of new developments or otherwise. Further
information concerning the company and its businesses, including
factors that potentially could materially affect the company's
financial results, is included in the company's other filings with
the SEC (including, but not limited to, the factors discussed in
Item 1A. Risk Factors of the company's most recent annual report on
Form 10-K and quarterly reports on Form 10-Q).
Third Quarter 2016
Press Release
|
(in millions of
dollars)
|
Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
July 31
|
|
July 31
|
|
|
|
|
|
|
|
|
%
|
|
|
|
|
|
|
|
%
|
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
Net sales and
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and
turf
|
|
$
|
4,704
|
|
$
|
5,308
|
|
-11
|
|
$
|
14,046
|
|
$
|
15,155
|
|
-7
|
Construction and
forestry
|
|
|
1,157
|
|
|
1,532
|
|
-24
|
|
|
3,691
|
|
|
4,688
|
|
-21
|
Total net
sales
|
|
|
5,861
|
|
|
6,840
|
|
-14
|
|
|
17,737
|
|
|
19,843
|
|
-11
|
Financial
services
|
|
|
667
|
|
|
636
|
|
+5
|
|
|
1,954
|
|
|
1,937
|
|
+1
|
Other
revenues
|
|
|
196
|
|
|
118
|
|
+66
|
|
|
433
|
|
|
367
|
|
+18
|
Total net sales
and revenues
|
|
$
|
6,724
|
|
$
|
7,594
|
|
-11
|
|
$
|
20,124
|
|
$
|
22,147
|
|
-9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit:
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agriculture and
turf
|
|
$
|
571
|
|
$
|
472
|
|
+21
|
|
$
|
1,329
|
|
$
|
1,378
|
|
-4
|
Construction and
forestry
|
|
|
54
|
|
|
129
|
|
-58
|
|
|
197
|
|
|
464
|
|
-58
|
Financial
services
|
|
|
191
|
|
|
239
|
|
-20
|
|
|
545
|
|
|
737
|
|
-26
|
Total operating
profit
|
|
|
816
|
|
|
840
|
|
-3
|
|
|
2,071
|
|
|
2,579
|
|
-20
|
Reconciling items
**
|
|
|
(100)
|
|
|
(87)
|
|
+15
|
|
|
(272)
|
|
|
(254)
|
|
+7
|
Income
taxes
|
|
|
(227)
|
|
|
(241)
|
|
-6
|
|
|
(560)
|
|
|
(736)
|
|
-24
|
Net income
attributable to Deere & Company
|
|
$
|
489
|
|
$
|
512
|
|
-4
|
|
$
|
1,239
|
|
$
|
1,589
|
|
-22
|
|
|
*
|
Operating profit is
income from continuing operations before corporate expenses,
certain external interest expense, certain foreign exchange gains
and losses and income taxes. Operating profit of the financial
services segment includes the effect of interest expense and
foreign exchange gains or losses.
|
|
|
**
|
Reconciling items are
primarily corporate expenses, certain external interest expense,
certain foreign exchange gains and losses and net income
attributable to noncontrolling interests.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED INCOME
|
For the Three Months
Ended July 31, 2016 and 2015
|
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
Net Sales and
Revenues
|
|
|
|
|
|
|
Net sales
|
|
$
|
5,861.4
|
|
$
|
6,839.5
|
Finance and interest
income
|
|
|
638.5
|
|
|
596.7
|
Other
income
|
|
|
224.5
|
|
|
157.5
|
Total
|
|
|
6,724.4
|
|
|
7,593.7
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
Cost of
sales
|
|
|
4,494.2
|
|
|
5,358.0
|
Research and
development expenses
|
|
|
338.8
|
|
|
346.8
|
Selling,
administrative and general expenses
|
|
|
709.0
|
|
|
755.3
|
Interest
expense
|
|
|
200.7
|
|
|
171.5
|
Other operating
expenses
|
|
|
276.6
|
|
|
223.6
|
Total
|
|
|
6,019.3
|
|
|
6,855.2
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
705.1
|
|
|
738.5
|
Provision for income
taxes
|
|
|
226.5
|
|
|
241.0
|
Income of
Consolidated Group
|
|
|
478.6
|
|
|
497.5
|
Equity in income of
unconsolidated affiliates
|
|
|
10.0
|
|
|
14.2
|
Net
Income
|
|
|
488.6
|
|
|
511.7
|
Less: Net income (loss)
attributable to noncontrolling interests
|
|
|
(.2)
|
|
|
.1
|
Net Income
Attributable to Deere & Company
|
|
$
|
488.8
|
|
$
|
511.6
|
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
|
Basic
|
|
$
|
1.55
|
|
$
|
1.54
|
Diluted
|
|
$
|
1.55
|
|
$
|
1.53
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
|
Basic
|
|
|
314.3
|
|
|
331.4
|
Diluted
|
|
|
315.7
|
|
|
334.1
|
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED INCOME
|
For the Nine Months
Ended July 31, 2016 and 2015
|
(In millions of
dollars and shares except per share amounts) Unaudited
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
Net Sales and
Revenues
|
|
|
|
|
|
|
Net sales
|
|
$
|
17,737.1
|
|
$
|
19,843.1
|
Finance and interest
income
|
|
|
1,849.0
|
|
|
1,766.7
|
Other
income
|
|
|
538.3
|
|
|
537.7
|
Total
|
|
|
20,124.4
|
|
|
22,147.5
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
Cost of
sales
|
|
|
13,865.3
|
|
|
15,472.8
|
Research and
development expenses
|
|
|
1,003.1
|
|
|
1,021.1
|
Selling,
administrative and general expenses
|
|
|
2,016.8
|
|
|
2,154.2
|
Interest
expense
|
|
|
564.9
|
|
|
517.1
|
Other operating
expenses
|
|
|
884.7
|
|
|
659.1
|
Total
|
|
|
18,334.8
|
|
|
19,824.3
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
1,789.6
|
|
|
2,323.2
|
Provision for income
taxes
|
|
|
559.9
|
|
|
735.6
|
Income of
Consolidated Group
|
|
|
1,229.7
|
|
|
1,587.6
|
Equity in income of
unconsolidated affiliates
|
|
|
7.3
|
|
|
1.8
|
Net
Income
|
|
|
1,237.0
|
|
|
1,589.4
|
Less: Net income (loss)
attributable to noncontrolling interests
|
|
|
(1.6)
|
|
|
.6
|
Net Income
Attributable to Deere & Company
|
|
$
|
1,238.6
|
|
$
|
1,588.8
|
|
|
|
|
|
|
|
Per Share
Data
|
|
|
|
|
|
|
Basic
|
|
$
|
3.93
|
|
$
|
4.71
|
Diluted
|
|
$
|
3.91
|
|
$
|
4.67
|
|
|
|
|
|
|
|
Average Shares
Outstanding
|
|
|
|
|
|
|
Basic
|
|
|
315.4
|
|
|
337.3
|
Diluted
|
|
|
316.7
|
|
|
339.9
|
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEET
|
(In millions of
dollars) Unaudited
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31
|
|
October 31
|
|
July 31
|
|
|
2016
|
|
2015
|
|
2015
|
Assets
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
4,321.0
|
|
$
|
4,162.2
|
|
$
|
4,130.8
|
Marketable
securities
|
|
|
468.9
|
|
|
437.4
|
|
|
421.1
|
Receivables from
unconsolidated affiliates
|
|
|
18.7
|
|
|
33.3
|
|
|
43.2
|
Trade accounts and
notes receivable - net
|
|
|
3,924.6
|
|
|
3,051.1
|
|
|
4,220.4
|
Financing receivables
- net
|
|
|
22,594.8
|
|
|
24,809.0
|
|
|
24,973.4
|
Financing receivables
securitized - net
|
|
|
5,947.4
|
|
|
4,834.6
|
|
|
4,737.8
|
Other
receivables
|
|
|
811.9
|
|
|
991.2
|
|
|
823.1
|
Equipment on
operating leases - net
|
|
|
5,602.7
|
|
|
4,970.4
|
|
|
4,426.0
|
Inventories
|
|
|
3,851.3
|
|
|
3,817.0
|
|
|
4,319.0
|
Property and
equipment - net
|
|
|
5,047.3
|
|
|
5,181.5
|
|
|
5,126.4
|
Investments in
unconsolidated affiliates
|
|
|
246.2
|
|
|
303.5
|
|
|
310.6
|
Goodwill
|
|
|
823.6
|
|
|
726.0
|
|
|
715.9
|
Other intangible
assets - net
|
|
|
109.5
|
|
|
63.6
|
|
|
57.8
|
Retirement
benefits
|
|
|
323.1
|
|
|
215.6
|
|
|
335.0
|
Deferred income
taxes
|
|
|
2,612.6
|
|
|
2,767.3
|
|
|
2,705.0
|
Other
assets
|
|
|
1,902.8
|
|
|
1,583.9
|
|
|
1,586.7
|
Total
Assets
|
|
$
|
58,606.4
|
|
$
|
57,947.6
|
|
$
|
58,932.2
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
7,362.1
|
|
$
|
8,426.6
|
|
$
|
9,347.9
|
Short-term
securitization borrowings
|
|
|
5,728.9
|
|
|
4,590.0
|
|
|
4,595.4
|
Payables to
unconsolidated affiliates
|
|
|
74.2
|
|
|
80.6
|
|
|
73.7
|
Accounts payable and
accrued expenses
|
|
|
6,799.5
|
|
|
7,311.5
|
|
|
7,235.8
|
Deferred income
taxes
|
|
|
172.3
|
|
|
160.8
|
|
|
150.9
|
Long-term
borrowings
|
|
|
24,128.4
|
|
|
23,832.8
|
|
|
23,200.9
|
Retirement benefits
and other liabilities
|
|
|
6,886.9
|
|
|
6,787.7
|
|
|
6,602.6
|
Total
liabilities
|
|
|
51,152.3
|
|
|
51,190.0
|
|
|
51,207.2
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
Total Deere &
Company stockholders' equity
|
|
|
7,428.4
|
|
|
6,743.4
|
|
|
7,723.1
|
Noncontrolling
interests
|
|
|
11.3
|
|
|
14.2
|
|
|
1.9
|
Total stockholders'
equity
|
|
|
7,439.7
|
|
|
6,757.6
|
|
|
7,725.0
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
58,606.4
|
|
$
|
57,947.6
|
|
$
|
58,932.2
|
|
|
|
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
DEERE &
COMPANY
|
STATEMENT OF
CONSOLIDATED CASH FLOWS
|
For the Nine Months
Ended July 31, 2016 and 2015
|
(In millions of
dollars) Unaudited
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
Net income
|
|
$
|
1,237.0
|
|
$
|
1,589.4
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Provision for credit
losses
|
|
|
70.3
|
|
|
35.4
|
Provision for
depreciation and amortization
|
|
|
1,158.4
|
|
|
1,029.2
|
Impairment
charges
|
|
|
49.7
|
|
|
|
Share-based
compensation expense
|
|
|
51.8
|
|
|
47.7
|
Undistributed earnings
of unconsolidated affiliates
|
|
|
.7
|
|
|
(5.2)
|
Provision for deferred
income taxes
|
|
|
155.5
|
|
|
73.0
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Trade, notes and
financing receivables related to sales
|
|
|
(588.1)
|
|
|
(598.0)
|
Insurance
receivables
|
|
|
|
|
|
333.4
|
Inventories
|
|
|
(380.1)
|
|
|
(941.5)
|
Accounts payable and
accrued expenses
|
|
|
(461.9)
|
|
|
(594.6)
|
Accrued income taxes
payable/receivable
|
|
|
78.3
|
|
|
(58.1)
|
Retirement
benefits
|
|
|
145.8
|
|
|
293.4
|
Other
|
|
|
(197.5)
|
|
|
(12.3)
|
Net cash provided by
operating activities
|
|
|
1,319.9
|
|
|
1,191.8
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
Collections of
receivables (excluding receivables related to sales)
|
|
|
11,312.7
|
|
|
11,517.9
|
Proceeds from
maturities and sales of marketable securities
|
|
|
139.2
|
|
|
833.0
|
Proceeds from sales
of equipment on operating leases
|
|
|
916.6
|
|
|
773.7
|
Proceeds from sales
of business and unconsolidated affiliates, net of cash
sold
|
|
|
81.1
|
|
|
149.2
|
Cost of receivables
acquired (excluding receivables related to sales)
|
|
|
(10,423.4)
|
|
|
(11,162.9)
|
Purchases of
marketable securities
|
|
|
(149.9)
|
|
|
(100.8)
|
Purchases of property
and equipment
|
|
|
(387.0)
|
|
|
(461.4)
|
Cost of equipment on
operating leases acquired
|
|
|
(1,730.6)
|
|
|
(1,355.7)
|
Acquisitions of
businesses, net of cash acquired
|
|
|
(198.9)
|
|
|
|
Other
|
|
|
77.8
|
|
|
(23.4)
|
Net cash provided by
(used for) investing activities
|
|
|
(362.4)
|
|
|
169.6
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
Increase (decrease)
in total short-term borrowings
|
|
|
(133.7)
|
|
|
1,805.2
|
Proceeds from
long-term borrowings
|
|
|
4,115.2
|
|
|
3,639.8
|
Payments of long-term
borrowings
|
|
|
(3,977.3)
|
|
|
(3,980.1)
|
Proceeds from
issuance of common stock
|
|
|
17.5
|
|
|
170.4
|
Repurchases of common
stock
|
|
|
(205.4)
|
|
|
(1,833.9)
|
Dividends
paid
|
|
|
(572.6)
|
|
|
(617.9)
|
Excess tax benefits
from share-based compensation
|
|
|
3.8
|
|
|
18.5
|
Other
|
|
|
(53.6)
|
|
|
(56.9)
|
Net cash used for
financing activities
|
|
|
(806.1)
|
|
|
(854.9)
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
|
|
7.4
|
|
|
(162.7)
|
|
|
|
|
|
|
|
Net Increase in
Cash and Cash Equivalents
|
|
|
158.8
|
|
|
343.8
|
Cash and Cash
Equivalents at Beginning of Period
|
|
|
4,162.2
|
|
|
3,787.0
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
4,321.0
|
|
$
|
4,130.8
|
|
|
|
|
|
|
|
|
See Condensed Notes
to Interim Consolidated Financial Statements.
|
Condensed Notes to
Interim Consolidated Financial Statements (Unaudited)
|
|
(1)
|
In May 2016, the
Company received a distribution of $60 million from SiteOne
Landscapes, LLC (SiteOne) that reduced the Company's investment in
unconsolidated affiliates. The distribution included $4 million of
a return on investment, which is shown in the Statement of
Consolidated Cash Flows in undistributed earnings of unconsolidated
affiliates in net cash provided by operating activities, and $56
million of a return of investment shown in other cash flows from
investing activities. In May 2016, the Company also sold
approximately 30 percent of its interest in SiteOne in an initial
public offering and terminated a service agreement resulting in
gross proceeds of approximately $81 million with a total gain of
$75 million pretax or $47 million after-tax. The gain is recorded
in other income. The Company retained an approximately 24 percent
ownership interest in SiteOne.
|
|
|
(2)
|
Dividends declared
and paid on a per share basis were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
July 31
|
|
July 31
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared
|
|
$
|
.60
|
|
$
|
.60
|
|
$
|
1.80
|
|
$
|
1.80
|
Dividends
paid
|
|
$
|
.60
|
|
$
|
.60
|
|
$
|
1.80
|
|
$
|
1.80
|
|
|
(3)
|
The calculation of
basic net income per share is based on the average number of shares
outstanding. The calculation of diluted net income per share
recognizes any dilutive effect of share-based
compensation.
|
|
|
(4)
|
The consolidated
financial statements represent the consolidation of all
Deere & Company's subsidiaries. In the supplemental
consolidating data in Note 5 to the financial statements,
"Equipment Operations" include the Company's agriculture and turf
operations and construction and forestry operations with "Financial
Services" reflected on the equity basis.
|
(5) SUPPLEMENTAL
CONSOLIDATING DATA
|
STATEMENT OF
INCOME
|
For the Three Months
Ended July 31, 2016 and 2015
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
5,861.4
|
|
$
|
6,839.5
|
|
|
|
|
|
|
Finance and interest
income
|
|
|
15.1
|
|
|
20.8
|
|
$
|
691.0
|
|
$
|
644.3
|
Other
income
|
|
|
216.9
|
|
|
140.8
|
|
|
27.6
|
|
|
51.2
|
Total
|
|
|
6,093.4
|
|
|
7,001.1
|
|
|
718.6
|
|
|
695.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
4,494.6
|
|
|
5,358.4
|
|
|
|
|
|
|
Research and
development expenses
|
|
|
338.8
|
|
|
346.8
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
|
573.1
|
|
|
633.5
|
|
|
137.6
|
|
|
123.9
|
Interest
expense
|
|
|
65.9
|
|
|
69.6
|
|
|
140.8
|
|
|
113.6
|
Interest compensation
to Financial Services
|
|
|
61.6
|
|
|
56.7
|
|
|
|
|
|
|
Other operating
expenses
|
|
|
45.6
|
|
|
36.3
|
|
|
248.9
|
|
|
219.3
|
Total
|
|
|
5,579.6
|
|
|
6,501.3
|
|
|
527.3
|
|
|
456.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
513.8
|
|
|
499.8
|
|
|
191.3
|
|
|
238.7
|
Provision for income
taxes
|
|
|
160.9
|
|
|
155.5
|
|
|
65.6
|
|
|
85.5
|
Income of
Consolidated Group
|
|
|
352.9
|
|
|
344.3
|
|
|
125.7
|
|
|
153.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services
|
|
|
125.9
|
|
|
153.4
|
|
|
.2
|
|
|
.2
|
Other
|
|
|
9.8
|
|
|
14.0
|
|
|
|
|
|
|
Total
|
|
|
135.7
|
|
|
167.4
|
|
|
.2
|
|
|
.2
|
Net
Income
|
|
|
488.6
|
|
|
511.7
|
|
|
125.9
|
|
|
153.4
|
Less: Net income (loss)
attributable to noncontrolling interests
|
|
|
(.2)
|
|
|
.1
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
|
$
|
488.8
|
|
$
|
511.6
|
|
$
|
125.9
|
|
$
|
153.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Deere &
Company with Financial Services on the equity basis.
|
|
The supplemental
consolidating data is presented for informational purposes.
Transactions between the "Equipment Operations" and "Financial
Services" have been eliminated to arrive at the consolidated
financial statements.
|
SUPPLEMENTAL
CONSOLIDATING DATA (Continued)
|
STATEMENT OF
INCOME
|
For the Nine Months
Ended July 31, 2016 and 2015
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net Sales and
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
17,737.1
|
|
$
|
19,843.1
|
|
|
|
|
|
|
Finance and interest
income
|
|
|
45.8
|
|
|
58.8
|
|
$
|
1,988.9
|
|
$
|
1,900.9
|
Other
income
|
|
|
497.1
|
|
|
451.2
|
|
|
143.9
|
|
|
201.4
|
Total
|
|
|
18,280.0
|
|
|
20,353.1
|
|
|
2,132.8
|
|
|
2,102.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales
|
|
|
13,866.7
|
|
|
15,474.2
|
|
|
|
|
|
|
Research and
development expenses
|
|
|
1,003.1
|
|
|
1,021.1
|
|
|
|
|
|
|
Selling,
administrative and general expenses
|
|
|
1,642.6
|
|
|
1,794.1
|
|
|
379.6
|
|
|
366.9
|
Interest
expense
|
|
|
195.7
|
|
|
208.0
|
|
|
386.7
|
|
|
346.0
|
Interest compensation
to Financial Services
|
|
|
168.2
|
|
|
156.0
|
|
|
|
|
|
|
Other operating
expenses
|
|
|
158.2
|
|
|
112.6
|
|
|
822.4
|
|
|
653.3
|
Total
|
|
|
17,034.5
|
|
|
18,766.0
|
|
|
1,588.7
|
|
|
1,366.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income of
Consolidated Group before Income Taxes
|
|
|
1,245.5
|
|
|
1,587.1
|
|
|
544.1
|
|
|
736.1
|
Provision for income
taxes
|
|
|
372.5
|
|
|
478.5
|
|
|
187.4
|
|
|
257.1
|
Income of
Consolidated Group
|
|
|
873.0
|
|
|
1,108.6
|
|
|
356.7
|
|
|
479.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in Income
of Unconsolidated Subsidiaries and Affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Services
|
|
|
357.9
|
|
|
480.0
|
|
|
1.2
|
|
|
1.0
|
Other
|
|
|
6.1
|
|
|
.8
|
|
|
|
|
|
|
Total
|
|
|
364.0
|
|
|
480.8
|
|
|
1.2
|
|
|
1.0
|
Net
Income
|
|
|
1,237.0
|
|
|
1,589.4
|
|
|
357.9
|
|
|
480.0
|
Less: Net income (loss)
attributable to noncontrolling interests
|
|
|
(1.6)
|
|
|
.6
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
|
$
|
1,238.6
|
|
$
|
1,588.8
|
|
$
|
357.9
|
|
$
|
480.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Deere &
Company with Financial Services on the equity basis.
|
|
The supplemental
consolidating data is presented for informational purposes.
Transactions between the "Equipment Operations" and "Financial
Services" have been eliminated to arrive at the consolidated
financial statements.
|
SUPPLEMENTAL
CONSOLIDATING DATA (Continued)
|
CONDENSED BALANCE
SHEET
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
July 31
|
|
October 31
|
|
July 31
|
|
July 31
|
|
October 31
|
|
July 31
|
|
|
2016
|
|
2015
|
|
2015
|
|
2016
|
|
2015
|
|
2015
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
3,134.9
|
|
$
|
2,900.0
|
|
$
|
2,907.1
|
|
$
|
1,186.1
|
|
$
|
1,262.2
|
|
$
|
1,223.7
|
Marketable
securities
|
|
|
40.2
|
|
|
47.7
|
|
|
47.4
|
|
|
428.7
|
|
|
389.7
|
|
|
373.7
|
Receivables from
unconsolidated subsidiaries and affiliates
|
|
|
2,429.5
|
|
|
2,428.7
|
|
|
2,941.5
|
|
|
|
|
|
|
|
|
|
Trade accounts and
notes receivable - net
|
|
|
535.4
|
|
|
485.2
|
|
|
581.2
|
|
|
4,560.6
|
|
|
3,553.1
|
|
|
4,780.9
|
Financing receivables
- net
|
|
|
.4
|
|
|
.9
|
|
|
4.7
|
|
|
22,594.4
|
|
|
24,808.1
|
|
|
24,968.7
|
Financing receivables
securitized - net
|
|
|
|
|
|
|
|
|
|
|
|
5,947.4
|
|
|
4,834.6
|
|
|
4,737.8
|
Other
receivables
|
|
|
726.6
|
|
|
849.5
|
|
|
779.2
|
|
|
103.0
|
|
|
152.9
|
|
|
76.2
|
Equipment on
operating leases - net
|
|
|
|
|
|
|
|
|
|
|
|
5,602.7
|
|
|
4,970.4
|
|
|
4,426.0
|
Inventories
|
|
|
3,851.3
|
|
|
3,817.0
|
|
|
4,319.0
|
|
|
|
|
|
|
|
|
|
Property and
equipment - net
|
|
|
4,994.7
|
|
|
5,126.2
|
|
|
5,072.4
|
|
|
52.6
|
|
|
55.3
|
|
|
54.0
|
Investments in
unconsolidated subsidiaries
and affiliates
|
|
|
4,752.9
|
|
|
4,817.6
|
|
|
4,923.8
|
|
|
11.6
|
|
|
10.5
|
|
|
10.2
|
Goodwill
|
|
|
823.6
|
|
|
726.0
|
|
|
715.9
|
|
|
|
|
|
|
|
|
|
Other intangible
assets - net
|
|
|
109.5
|
|
|
63.6
|
|
|
57.8
|
|
|
|
|
|
|
|
|
|
Retirement
benefits
|
|
|
319.0
|
|
|
211.9
|
|
|
335.5
|
|
|
21.8
|
|
|
25.0
|
|
|
27.1
|
Deferred income
taxes
|
|
|
3,173.2
|
|
|
3,092.0
|
|
|
3,028.6
|
|
|
71.9
|
|
|
67.9
|
|
|
61.6
|
Other
assets
|
|
|
860.1
|
|
|
807.3
|
|
|
859.4
|
|
|
1,045.8
|
|
|
779.1
|
|
|
730.0
|
Total
Assets
|
|
$
|
25,751.3
|
|
$
|
25,373.6
|
|
$
|
26,573.5
|
|
$
|
41,626.6
|
|
$
|
40,908.8
|
|
$
|
41,469.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
borrowings
|
|
$
|
261.7
|
|
$
|
464.3
|
|
$
|
650.8
|
|
$
|
7,100.4
|
|
$
|
7,962.3
|
|
$
|
8,697.1
|
Short-term
securitization borrowings
|
|
|
|
|
|
|
|
|
|
|
|
5,728.9
|
|
|
4,590.0
|
|
|
4,595.4
|
Payables to
unconsolidated subsidiaries and affiliates
|
|
|
74.2
|
|
|
80.6
|
|
|
73.7
|
|
|
2,410.7
|
|
|
2,395.4
|
|
|
2,898.3
|
Accounts payable and
accrued expenses
|
|
|
6,470.8
|
|
|
6,801.2
|
|
|
7,025.1
|
|
|
1,521.0
|
|
|
1,511.2
|
|
|
1,387.3
|
Deferred income
taxes
|
|
|
97.3
|
|
|
86.8
|
|
|
79.9
|
|
|
707.5
|
|
|
466.6
|
|
|
456.2
|
Long-term
borrowings
|
|
|
4,578.6
|
|
|
4,460.6
|
|
|
4,475.4
|
|
|
19,549.8
|
|
|
19,372.2
|
|
|
18,725.5
|
Retirement benefits
and other liabilities
|
|
|
6,814.6
|
|
|
6,722.5
|
|
|
6,543.6
|
|
|
90.0
|
|
|
86.4
|
|
|
86.7
|
Total
liabilities
|
|
|
18,297.2
|
|
|
18,616.0
|
|
|
18,848.5
|
|
|
37,108.3
|
|
|
36,384.1
|
|
|
36,846.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interest
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Deere & Company stockholders' equity
|
|
|
7,428.4
|
|
|
6,743.4
|
|
|
7,723.1
|
|
|
4,518.3
|
|
|
4,524.7
|
|
|
4,623.4
|
Noncontrolling
interests
|
|
|
11.3
|
|
|
14.2
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
|
7,439.7
|
|
|
6,757.6
|
|
|
7,725.0
|
|
|
4,518.3
|
|
|
4,524.7
|
|
|
4,623.4
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
25,751.3
|
|
$
|
25,373.6
|
|
$
|
26,573.5
|
|
$
|
41,626.6
|
|
$
|
40,908.8
|
|
$
|
41,469.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Deere &
Company with Financial Services on the equity basis.
|
|
The supplemental
consolidating data is presented for informational purposes.
Transactions between the "Equipment Operations" and "Financial
Services" have been eliminated to arrive at the consolidated
financial statements.
|
SUPPLEMENTAL
CONSOLIDATING DATA (Continued)
|
STATEMENT OF CASH
FLOWS
|
For the Nine Months
Ended July 31, 2016 and 2015
|
(In millions of dollars) Unaudited
|
|
EQUIPMENT OPERATIONS*
|
|
FINANCIAL SERVICES
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1,237.0
|
|
$
|
1,589.4
|
|
$
|
357.9
|
|
$
|
480.0
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for credit
losses
|
|
|
5.3
|
|
|
2.1
|
|
|
65.0
|
|
|
33.3
|
Provision for
depreciation and amortization
|
|
|
613.7
|
|
|
605.6
|
|
|
615.5
|
|
|
503.2
|
Impairment
charges
|
|
|
|
|
|
|
|
|
49.7
|
|
|
|
Undistributed earnings
of unconsolidated subsidiaries and affiliates
|
|
|
55.9
|
|
|
(4.9)
|
|
|
(1.0)
|
|
|
(.8)
|
Provision (credit) for
deferred income taxes
|
|
|
(77.0)
|
|
|
(39.6)
|
|
|
232.5
|
|
|
112.6
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
|
|
(57.5)
|
|
|
37.2
|
|
|
|
|
|
|
Insurance
receivables
|
|
|
|
|
|
|
|
|
|
|
|
333.4
|
Inventories
|
|
|
59.5
|
|
|
(473.2)
|
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
|
(285.6)
|
|
|
(113.4)
|
|
|
7.8
|
|
|
(322.3)
|
Accrued income taxes
payable/receivable
|
|
|
72.4
|
|
|
(82.9)
|
|
|
5.9
|
|
|
24.8
|
Retirement
benefits
|
|
|
139.6
|
|
|
282.1
|
|
|
6.2
|
|
|
11.3
|
Other
|
|
|
(118.8)
|
|
|
145.8
|
|
|
56.8
|
|
|
(25.5)
|
Net cash provided by
operating activities
|
|
|
1,644.5
|
|
|
1,948.2
|
|
|
1,396.3
|
|
|
1,150.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Collections of
receivables (excluding trade and wholesale)
|
|
|
|
|
|
|
|
|
12,208.1
|
|
|
12,516.5
|
Proceeds from
maturities and sales of marketable securities
|
|
|
75.6
|
|
|
700.1
|
|
|
63.6
|
|
|
132.9
|
Proceeds from sales
of equipment on operating leases
|
|
|
|
|
|
|
|
|
916.6
|
|
|
773.7
|
Proceeds from sales
of business and unconsolidated affiliates,
net of cash sold
|
|
|
81.1
|
|
|
|
|
|
|
|
|
149.2
|
Cost of receivables
acquired (excluding trade and wholesale)
|
|
|
|
|
|
|
|
|
(11,236.7)
|
|
|
(12,063.2)
|
Purchases of
marketable securities
|
|
|
(61.0)
|
|
|
(49.1)
|
|
|
(88.9)
|
|
|
(51.7)
|
Purchases of property
and equipment
|
|
|
(385.4)
|
|
|
(458.1)
|
|
|
(1.6)
|
|
|
(3.3)
|
Cost of equipment on
operating leases acquired
|
|
|
|
|
|
|
|
|
(2,324.8)
|
|
|
(1,988.6)
|
Increase in trade and
wholesale receivables
|
|
|
|
|
|
|
|
|
(786.5)
|
|
|
(924.0)
|
Acquisitions of
businesses, net of cash acquired
|
|
|
(198.9)
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
(24.2)
|
|
|
2.2
|
|
|
70.7
|
|
|
(22.1)
|
Net cash provided by
(used for) investing activities
|
|
|
(512.8)
|
|
|
195.1
|
|
|
(1,179.5)
|
|
|
(1,480.6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase (decrease)
in total short-term borrowings
|
|
|
(170.0)
|
|
|
318.5
|
|
|
36.3
|
|
|
1,486.7
|
Change in
intercompany receivables/payables
|
|
|
(12.1)
|
|
|
447.2
|
|
|
12.1
|
|
|
(447.2)
|
Proceeds from
long-term borrowings
|
|
|
139.4
|
|
|
6.7
|
|
|
3,975.8
|
|
|
3,633.1
|
Payments of long-term
borrowings
|
|
|
(70.3)
|
|
|
(147.1)
|
|
|
(3,907.0)
|
|
|
(3,833.0)
|
Proceeds from
issuance of common stock
|
|
|
17.5
|
|
|
170.4
|
|
|
|
|
|
|
Repurchases of common
stock
|
|
|
(205.4)
|
|
|
(1,833.9)
|
|
|
|
|
|
|
Dividends
paid
|
|
|
(572.6)
|
|
|
(617.9)
|
|
|
(412.1)
|
|
|
(479.6)
|
Excess tax benefits
from share-based compensation
|
|
|
3.8
|
|
|
18.5
|
|
|
|
|
|
|
Other
|
|
|
(28.7)
|
|
|
(38.1)
|
|
|
(3.8)
|
|
|
9.5
|
Net cash provided by
(used for) financing activities
|
|
|
(898.4)
|
|
|
(1,675.7)
|
|
|
(298.7)
|
|
|
369.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash and Cash Equivalents
|
|
|
1.6
|
|
|
(129.7)
|
|
|
5.8
|
|
|
(33.0)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
|
|
234.9
|
|
|
337.9
|
|
|
(76.1)
|
|
|
5.9
|
Cash and Cash
Equivalents at Beginning of Period
|
|
|
2,900.0
|
|
|
2,569.2
|
|
|
1,262.2
|
|
|
1,217.8
|
Cash and Cash
Equivalents at End of Period
|
|
$
|
3,134.9
|
|
$
|
2,907.1
|
|
$
|
1,186.1
|
|
$
|
1,223.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Deere &
Company with Financial Services on the equity basis.
|
|
The supplemental
consolidating data is presented for informational purposes.
Transactions between the "Equipment Operations" and "Financial
Services" have been eliminated to arrive at the consolidated
financial statements.
|
Deere &
Company
|
Other Financial
Information
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months
Ended July 31,
|
|
Equipment Operations
|
Agriculture and Turf
|
Construction and Forestry
|
Dollars in millions
|
|
2016
|
2015
|
2016
|
2015
|
2016
|
2015
|
Net
Sales
|
|
$
|
17,737
|
|
$
|
19,843
|
|
$
|
14,046
|
|
$
|
15,155
|
|
$
|
3,691
|
|
$
|
4,688
|
|
Average
Identifiable Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO
|
|
$
|
11,918
|
|
$
|
12,720
|
|
$
|
8,750
|
|
$
|
9,260
|
|
$
|
3,168
|
|
$
|
3,460
|
|
With Inventories at
Standard Cost
|
|
$
|
13,188
|
|
$
|
14,073
|
|
$
|
9,794
|
|
$
|
10,383
|
|
$
|
3,394
|
|
$
|
3,690
|
|
Operating
Profit
|
|
$
|
1,526
|
|
$
|
1,842
|
|
$
|
1,329
|
|
$
|
1,378
|
|
$
|
197
|
|
$
|
464
|
|
Percent of Net
Sales
|
|
|
8.6
|
%
|
|
9.3
|
%
|
|
9.5
|
%
|
|
9.1
|
%
|
|
5.3
|
%
|
|
9.9
|
%
|
Operating Return
on Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With Inventories at
LIFO
|
|
|
12.8
|
%
|
|
14.5
|
%
|
|
15.2
|
%
|
|
14.9
|
%
|
|
6.2
|
%
|
|
13.4
|
%
|
With Inventories at
Standard Cost
|
|
|
11.6
|
%
|
|
13.1
|
%
|
|
13.6
|
%
|
|
13.3
|
%
|
|
5.8
|
%
|
|
12.6
|
%
|
SVA Cost of
Assets
|
|
$
|
(1,187)
|
|
$
|
(1,266)
|
|
$
|
(881)
|
|
$
|
(934)
|
|
$
|
(306)
|
|
$
|
(332)
|
|
SVA
|
|
$
|
339
|
|
$
|
576
|
|
$
|
448
|
|
$
|
444
|
|
$
|
(109)
|
|
$
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Nine Months
Ended July 31,
|
|
Financial
Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dollars in
millions
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
Attributable to Deere & Company
|
|
$
|
358
|
|
$
|
480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Equity
|
|
$
|
4,481
|
|
$
|
4,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on
Equity
|
|
|
8.0
|
%
|
|
10.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Profit
|
|
$
|
545
|
|
$
|
737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
Equity
|
|
$
|
4,481
|
|
$
|
4,687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Equity
|
|
$
|
(511)
|
|
$
|
(540)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SVA
|
|
$
|
34
|
|
$
|
197
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company evaluates
its business results on the basis of accounting principles
generally accepted in the United States. In addition, it uses
a metric referred to as Shareholder Value Added (SVA), which
management believes is an appropriate measure for the performance
of its businesses. SVA is, in effect, the pretax profit left
over after subtracting the cost of enterprise capital. The
Company is aiming for a sustained creation of SVA and is using this
metric for various performance goals. Certain compensation is
also determined on the basis of performance using this
measure. For purposes of determining SVA, each of the
equipment segments is assessed a pretax cost of assets, which on an
annual basis is approximately 12 percent of the segment's average
identifiable operating assets during the applicable period with
inventory at standard cost. Management believes that valuing
inventories at standard cost more closely approximates the current
cost of inventory and the Company's investment in the asset.
The Financial Services segment is assessed an annual pretax cost of
approximately 15 percent of the segment's average equity. The
cost of assets or equity, as applicable, is deducted from the
operating profit or added to the operating loss of each segment to
determine the amount of SVA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/deere-announces-third-quarter-earnings-of-489-million-300315704.html
SOURCE Deere & Company